Question 1

The primary benefits derived from tariffs usually accrue to the:

Accepted Answer

A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs. 
A)  domestic consumers of goods protected by the tariffs. 
B)  foreign producers of goods protected by the tariffs. 
C)  domestic producers of export goods. 
D)  domestic suppliers of goods protected by the tariffs.

Question 2

The infant-industry argument about tariffs argues that:

Accepted Answer

A)  it is unfair to levy tariffs on items intended for use by infants. 
B)  tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C)  if a newly established domestic industry can survive in the short run, a tariff should be levied to protect it from foreign competition in the long run. 
D)  permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries. 
A)  it is unfair to levy tariffs on items intended for use by infants. 
B)  tariffs should be levied on foreign products that compete with new domestic industries only in the short run. 
C)  if a newly established domestic industry can survive in the short run, a tariff should be levied to protect it from foreign competition in the long run. 
D)  permanent tariffs should be levied on foreign products that compete with those produced by newly established domestic industries.

Question 3

A depreciation of one's currency means that:

Accepted Answer

A)  the country's exports will become more expensive. 
B)  it now requires less of this currency in exchange for one unit of another currency. 
C)  the country's imports will become less expensive. 
D)  it now requires more of this currency in exchange for one unit of another currency. 
E)  it now requires more units of other currencies in exchange for one unit of this currency. 
A)  the country's exports will become more expensive. 
B)  it now requires less of this currency in exchange for one unit of another currency. 
C)  the country's imports will become less expensive. 
D)  it now requires more of this currency in exchange for one unit of another currency. 
E)  it now requires more units of other currencies in exchange for one unit of this currency.

Question 4

Suppose a U.S.-made machine costs $500 and the exchange rate is 100 yen = $1.Now the exchange rate changes to 90 yen = $1.Then the:

Accepted Answer

A)  machine would now cost more dollars. 
B)  machine would now cost the Japanese citizen less yen. 
C)  machine would now cost less dollars. 
D)  machine would now cost the Japanese citizen more yen. 
E)  yen has depreciated in value. 
A)  machine would now cost more dollars. 
B)  machine would now cost the Japanese citizen less yen. 
C)  machine would now cost less dollars. 
D)  machine would now cost the Japanese citizen more yen. 
E)  yen has depreciated in value.

Question 5

Discuss the determinants of a nation's exchange rate value for its currency in foreign exchange markets.What happens to a nation's balance of trade if the nation's currency appreciates? Why?

Accepted Answer

A nation's exchange rate value is determ

Question 6

If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1,then:

Accepted Answer

A)  the dollar has depreciated in value. 
B)  U.S.-made goods will become less expensive to Japanese citizens. 
C)  the dollar has appreciated in value. 
D)  Japanese-made goods will become more expensive to U.S. citizens. 
E)  there will be an increase in the demand for dollars in the foreign exchange market. 
A)  the dollar has depreciated in value. 
B)  U.S.-made goods will become less expensive to Japanese citizens. 
C)  the dollar has appreciated in value. 
D)  Japanese-made goods will become more expensive to U.S. citizens. 
E)  there will be an increase in the demand for dollars in the foreign exchange market.

Question 7

Which of the following is not an argument used in favor of protectionism?

Accepted Answer

A)  To protect an "infant" industry. 
B)  To protect domestic jobs. 
C)  To preserve national security. 
D)  To protect against "unfair" competition because of cheap foreign labor. 
E)  To reduce prices paid by domestic consumers. 
A)  To protect an "infant" industry. 
B)  To protect domestic jobs. 
C)  To preserve national security. 
D)  To protect against "unfair" competition because of cheap foreign labor. 
E)  To reduce prices paid by domestic consumers.

Question 8

The current account balance tabulates the value of a country's exports of goods and services minus the value of its imports of goods and services.

Accepted Answer

A) True 
 B)False

Question 9

If people's incomes decrease,their demand for other currencies shifts to the right.

Accepted Answer

A) True 
 B)False

Question 10

If the yen price of dollars falls,then the dollar price of yen rises.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

Accepted Answer

A)  The domestic price of shoes would fall. 
B)  The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C)  The number of unemployed workers in the domestic shoe industry would decline. 
D)  The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations. 
A)  The domestic price of shoes would fall. 
B)  The supply of foreign shoes to the domestic market would decline, causing shoe prices to rise. 
C)  The number of unemployed workers in the domestic shoe industry would decline. 
D)  The demand for foreign-produced shoes would decrease, causing the price of shoes to increase in other nations.

Question 12

The average National Basketball Association player is over 6 feet tall.The average horse jockey is shorter than 5 1/2 feet tall.This is because height provides NBA players with:

Accepted Answer

A) d and e. 
B) an absolute advantage for horse racing. 
C) an absolute disadvantage for other sports in general. 
D) a comparative disadvantage in horse racing. 
E) a comparative advantage in basketball. 
A) d and e. 
B) an absolute advantage for horse racing. 
C) an absolute disadvantage for other sports in general. 
D) a comparative disadvantage in horse racing. 
E) a comparative advantage in basketball.

Question 13

Other things being equal,an increase in U.S.interest rates would be likely to cause an increase in the capital account surplus or a decrease in the capital account deficit.

Accepted Answer

A) True 
 B)False

Question 14

The purchase of U.S.assets by foreigners is a:

Accepted Answer

A)  capital inflow. 
B)  capital outflow. 
C)  current account deficit. 
D)  unilateral transfer. 
A)  capital inflow. 
B)  capital outflow. 
C)  current account deficit. 
D)  unilateral transfer.

Question 15

Exhibit 21-4 Coffee and tea output (pounds per hour)
  
-As shown in Exhibit 21-4,compared to Brazil,China has a comparative advantage in the production of:

Accepted Answer

A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea. 
A)  coffee. 
B)  tea. 
C)  both coffee and tea. 
D)  neither coffee nor tea.

Question 16

Exhibit 21-2 Production possibilities curves for U. S. and Mexico
  
-As shown in Exhibit 21-2,in Mexico,producing 1 additional ton of wheat costs:

Accepted Answer

A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth. 
A)  1/2 ton of cloth. 
B)  2/3 ton of cloth. 
C)  1 ton of cloth. 
D)  1 1/2 tons of cloth.

Question 17

Exhibit 21-1 Production possibilities curves
  
-In Exhibit 21-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.In Pada the cost of producing one more unit of wheat is equal to:

Accepted Answer

A)  3 units of corn. 
B)  1/3 unit of corn. 
C)  1/3 unit of wheat. 
D)  15 units of corn. 
E)  30 units of corn. 
A)  3 units of corn. 
B)  1/3 unit of corn. 
C)  1/3 unit of wheat. 
D)  15 units of corn. 
E)  30 units of corn.

Question 18

If a country's goods exports are less than its goods imports,then it experiences a:

Accepted Answer

A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  balance of trade surplus. 
D)  balance of trade deficit. 
A)  balance of payments surplus. 
B)  balance of payments deficit. 
C)  balance of trade surplus. 
D)  balance of trade deficit.

Question 19

Exhibit 21-4 Coffee and tea output (pounds per hour)
  
-As shown in Exhibit 21-4,the opportunity cost to Brazil of producing one pound of coffee is:

Accepted Answer

A)  1 pound of tea. 
B)  5 pounds of tea. 
C)  1/2 pound of tea. 
D)  10 pounds of tea. 
A)  1 pound of tea. 
B)  5 pounds of tea. 
C)  1/2 pound of tea. 
D)  10 pounds of tea.

Question 20

An increase in the equilibrium price of Japanese yen per dollar could be caused by a(n):

Accepted Answer

A)  increase in the general level of prices in Japan. 
B)  increase in the U.S. demand for domestically-built automobiles. 
C)  decrease in the U.S. income relative to the income in Japan. 
D)  increase in the supply of dollars on the foreign market. 
A)  increase in the general level of prices in Japan. 
B)  increase in the U.S. demand for domestically-built automobiles. 
C)  decrease in the U.S. income relative to the income in Japan. 
D)  increase in the supply of dollars on the foreign market.

Exam 21: International Trade and Finance

The primary benefits derived from tariffs usually accrue to the:

The infant-industry argument about tariffs argues that:

A depreciation of one's currency means that:

Suppose a U.S.-made machine costs $500 and the exchange rate is 100 yen = $1.Now the exchange rate changes to 90 yen = $1.Then the:

Discuss the determinants of a nation's exchange rate value for its currency in foreign exchange markets.What happens to a nation's balance of trade if the nation's currency appreciates? Why?

If the exchange rate between the yen and the dollar changes from 100 yen = $1 to 110 yen = $1,then:

Which of the following is not an argument used in favor of protectionism?

The current account balance tabulates the value of a country's exports of goods and services minus the value of its imports of goods and services.

If people's incomes decrease,their demand for other currencies shifts to the right.

If the yen price of dollars falls,then the dollar price of yen rises.

Which of the following would be expected if the tariff on foreign-produced shoes were decreased?

The average National Basketball Association player is over 6 feet tall.The average horse jockey is shorter than 5 1/2 feet tall.This is because height provides NBA players with:

Other things being equal,an increase in U.S.interest rates would be likely to cause an increase in the capital account surplus or a decrease in the capital account deficit.

The purchase of U.S.assets by foreigners is a:

Exhibit 21-4 Coffee and tea output (pounds per hour) -As shown in Exhibit 21-4,compared to Brazil,China has a comparative advantage in the production of:

Exhibit 21-2 Production possibilities curves for U. S. and Mexico -As shown in Exhibit 21-2,in Mexico,producing 1 additional ton of wheat costs:

Exhibit 21-1 Production possibilities curves -In Exhibit 21-1,the production possibilities curves of wheat and corn for Nabia and Pada are presented.In Pada the cost of producing one more unit of wheat is equal to:

If a country's goods exports are less than its goods imports,then it experiences a:

Exhibit 21-4 Coffee and tea output (pounds per hour) -As shown in Exhibit 21-4,the opportunity cost to Brazil of producing one pound of coffee is:

An increase in the equilibrium price of Japanese yen per dollar could be caused by a(n):

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

Economies in Transition

Growth and the Less-Developed Countries

Filters